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Cuba reports healthy tourism revenues despite outrage over dissident arrests
CubaNews / May 2003

By Larry Luxner

Fidel Castro is locking up dissidents and executing would-be hijackers like never before, but foreign tourists in search of sun, sand and sex seem oblivious to the political storm brewing across the Florida Straits.

Officials in Varadero are reporting record tourism revenues, with $107.6 million generated during the first two months of 2003. That’s a 5% increase over the same period last year.

At the end of February, Varadero — which will host Cuba's annual tourism convention May 5-8 — reported hotel revenues exceeding $42 million. In January and February alone, the sprawling resort's 48 properties welcomed well over 140,000 vacationers, translating into a daily average of 19,800 tourists.

Canada continues to be Varadero's top source of tourism, with Canadians occupying 60% of all rooms, followed by Germany, France, Spain, Mexico and Great Britain. The booming Varadero hotel strip, located in Matanzas province 90 miles east of Havana, now accepts euros along with dollars — a clear indication of the importance Cuban tourism officials place on luring Europeans to the island’s hard-currency resorts.

"Tourism is very good," said Eric Peyre, Cuba sales manager for France's Accor Group. "We were lucky not to be hurt by the war in Iraq."

Peyre, interviewed at his office in Havana's 472-room Novotel Miramar, said "we are 30% above 2002 figures" for the first quarter of 2002.

"We already have 70% confirmed bookings for the European market this summer, while the Caribbean as a region has only 54%," the hotel executive told CubaNews,noting that "the U.S. is not a major player in the Cuban tourism industry" and that the vast majority of Cuban-Americans who visit the island tend to stay in relatives' homes, not hotels.

Therefore, even if the Bush administration follows through with threats to eliminate family remittances and U.S. charter flights to Cuba, says Peyre, "it would have almost no impact on tourism here."

Dennis Hays, executive vice-president of the Cuban American National Foundation, hopes otherwise.

"I've seen editorials from all over the globe criticizing Castro's latest arrests and executions," said Hays from his Washington office.

Eventually, European tourists will find out that Cuba is a nasty and repressive place, and will have the decency not to frolic on a beach just a few miles from where political prisoners are being kept in dungeons.”

By far, the largest hotel operator on the island is Spain's Grupo Sol Meliá, which manages 20 luxury properties from Havana to Santiago de Cuba. At last count, the chain had 8,580 rooms in international-class hotels under its banner — nearly a third of Cuba's total. It also owns equity in four of the properties it manages: the Meliá Habana, the Meliá Varadero, the Meliá Las Américas and the Sol Club Palmeras.

According to newsletter CubaNegocios, the chain's 2002 income from its Cuba operations rose to 9.8 million euros, a 2.5% increase over 2001 earnings. This contrasts with the first half of 2002, when its earnings were 34.6% less than the same period in 2001.

"These figures suggest, on one hand, a notable improvement in management profitability and, on the other hand, a powerful boom in tourist arrivals to the island toward the end of last year," said the Madrid-based newsletter. "In fact, Sol Meliá's income in the last trimester of 2002 came to 2.5 million euros, which is almost double the previous record for this trimester, achieved in 1999 with an income of 1.6 million euros."

Another large chain in Cuba is Accor, which at the moment has four hotels in Cuba. But the contract to manage the largest of them, the 472-room Novotel Miramar, expires on Apr. 30, after which the hotel's owner, Gaviota — a unit of the Cuba's Revolutionary Armed Forces — will take control of the property until Spanish chain Occidental Hoteles assumes its management later this year.

That will leave three hotels in Accor's portfolio: the 178-room Sofitel Sevilla City Center, along the Prado in Habana Vieja; the 300-room Mercure Cuatro Palmas in Varadero, and the 385-room Coralia Club Playa de Oro, also in Varadero.

"We have plans to expand," said Peyre. "The current owner of the three hotels, Gran Caribe, will probably extend its management contract with us, and we are now in negotiations with Cubanacán. We will have more hotels to run — at least one more for this year, and then we'll see about next year."

Peyre, who has worked in Morocco, Venezuela, Gabon, Syria, Mauritius and the United Arab Emirates, says he's happy to be in Cuba.

"Compared to other countries in crisis, this is the easiest place to run a hotel," the 42-year-old executive told CubaNews. "It's very easy, because the union works on your side, and the relationship with the owner is very good. They always pay their fees on time, and always respect the management contract. so there is no instability whatsoever."

Foreign hotel chains in Cuba generally earn management fees equivalent to 3% of total revenue and 5% of net profit. Occupancy rates for Havana's major hotels averaged 75% to 80% during the first three months of 2003, which is considered better than average.

Said Peyre: "The ones who have problems recovering their money here are the companies that import and export."

Meanwhile, Mario Ramos, vice-president of Cuba's state-run Horizontes hotel chain, said his entity received 5% more visitors and earned 10% more revenues during the first three months of 2003 than during the same period of 2002. Profits were up 20%, said Ramos, whose chain owns over 6,000 rooms in 40 hotel facilities.

Among its current projects are the total remodeling of Havana's Hotel Capri and its famous Salon Rojo nightclub, as well as the opening of Horizontes' 466-room Palma Real Hotel in Varadero.

Horizontes is also involved in expansions at San Vicente and Cayo Levisa, as well adventure tourism ventures in the provinces of Pinar del Río and Santiago de Cuba, said Ramos.

In related news, Sol Meliá's Hotel Sol Cayo Coco, in the Jardines del Rey tourist region, has been upgraded to four stars as part of a new ranking system being implemented by Cuba's Ministry of Tourism.

Under the ministry's National Commission for Classification of Tourist Establishments, a total of 242 hotel properties in Cuba "will be upgraded on the basis of internationally accepted standards" between now and 2006.

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